Ohio has one of the most extensive gambling markets in the US, despite not offering licensed online casino gambling. But sportsbook operators have been warned by the state’s regulator, the Ohio Casino Control Commission (OCCC), to stay away from offering prediction markets.
These markets differ from traditional betting markets and function in a similar way to financial exchanges, where customers trade contracts based on a yes/no or win/lose dynamic. Contracts trade from $0 to $1, with trading based on market values. Contracts trading at $0.75 would expire at $1 if the prediction is correct, resulting in a $0.25 profit. If the selection is incorrect, there is no return for the customer.
Ohio’s sports betting market already generates almost $9 billion in handle, over $900 million in revenue, and is worth more than $181 million in taxes to the state. The online sports betting market dwarfs the retail market, grossing $882 million in revenue compared to around $18 million from land-based alternatives.
The state’s casino industry is limited to retail casinos only, with no tribal operations. The 11 state-licensed casinos generate almost $2.4 billion in gross gaming revenue and provide more than $1 billion in taxes. The lack of online casino operations means the state is missing out on valuable revenue streams, with online casino expert Andjelija Blagojevic explaining that offshore alternatives are proving popular among Ohioans.
Bettors can legally access offshore casino operators and take advantage of enticing bonuses, a wide range of games, and a variety of payment methods. Consumers can read more about the benefits and convenience of online casinos, as well as how they are licensed.
Only seven US states currently offer licensed online casino betting, but many more are currently considering legislative changes that would allow it. This would bring millions to the states in tax revenue, and would also give state regulators greater control over the betting markets being accessed by local consumers.
Offshore operators work outside the jurisdiction of the OCCC, and the latest moves by the regulator show how they can manage the markets on offer. The letter issued by the OCCC makes it clear to operators that expansion into unlicensed markets brings the industry into disrepute and could damage its reputation.
Rather than issuing threats, the OCCC hopes that the letter will be a sufficient warning to gambling operators, but the general consensus is that sports betting licenses could be revoked if operators don’t heed the warning. Six other states have issued cease-and-desist letters to Kalshi, a prediction market platform, as well as crypto.com and Robinhood.
The communication between the OCCC and sports betting operators in Ohio states that prediction markets can’t be operated in the state without the proper vetting and license. This does provide some hope for the industry that the state could be open to allowing it as long as operators apply for and meet the criteria for a new license.
Some Ohio operators are said to be exploring partnership deals with prediction market platforms, and the OCCC says that merely prohibiting Ohio customers from participation would not be enough, and the regulator would still harbor concerns over suitability.
There have also been calls for Ohio sportsbooks to stop prop betting following investigations into suspicious betting patterns concerning two pitchers for the Cleveland Guardians. Gov. DeWine suggested that banning prop bets across all sporting markets could be a solution. Ohio already prohibits prop betting markets for college sports, but it is unlikely that the state will go ahead with the unprecedented action of banning them from pro sports.
Prediction markets are on the rise in sports betting, with some market-leading sports betting operators expressing a keen interest. Ohio’s decision to block the market or any affiliation could become a massive hurdle for an emerging market, and operators will be keen to ensure they can offer their customers as wide a choice as possible.
Clarification regarding the licensing mentioned in the letter will be required before operators can fully take stock of the situation. The regulator will need to determine whether existing licenses can be applied to this emerging market, if there is scope for additional licensing that would allow it, or whether a blanket ban will apply.